Lack of awareness about scale of inheritance tax liability

The majority of Britons aged 55 and over have no idea what their inheritance tax (IHT) bill will be when they die

A survey for Time Investments found that 52% of those aged 55 plus do not know what their IHT will be when they pass away and 31% revealed they have never even checked the rules on IHT and how it applies to them personally.

As more and more families are finding their estates are over the IHT threshold and liable to the hefty 40% tax, IHT receipts have increased substantially over the last decade hitting £5.2bn for the 2019/20 tax year.

Time Investments found that 72% of financial advisers expect to see a rise in the number of retail investors looking for help with IHT planning, with 26% expecting a dramatic increase.

A Time Investments spokesperson said: ‘IHT is often called the voluntary tax as, with careful planning, there are many simple and legitimate ways to reduce an exposure to this tax.’

This trend is set to continue with the Chancellor announcing in March 2021 a freeze on tax-free allowances. Both the nil rate band (NRB) and residence nil rate band (RNRB) are fixed at £325,000 and £175,000 until April 2026.

Individuals are not currently required to pay IHT if the value of the estate is below the NRB of £325,000 and an additional RNRB £175,000 applies to those with an estate. Everything above this is taxable at 40%.

The freezing of these allowances may push some clients’ estates over the threshold and into paying IHT, particularly considering rising house prices and investment growth.

The five-year freeze on IHT is expected to bring in £985m in extra IHT revenue, meaning more than 36,000 estates a year are expected to pay IHT by 2026, up from around 25,000 estates currently. The change was described by the government as a measure to ‘reduce administrative burdens’ for those having to deal with IHT.

After the Budget, the government also announced that reporting regulations will be simplified later in 2021 so that from 1 January 2022 more than 90% of non-taxpaying estates will no longer have to complete IHT forms for deaths when probate or confirmation is required.

Ruby Flanagan |Reporter, Accountancy Daily

Ruby Flanagan is reporter on Accountancy Daily. Contact her on

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